Our client, Dr. Smith (pseudonym) recently reported to us an event that involved a long-time trusted employee.
This employee had been collecting and pocketing cash received from his patients and then recording these in the medical software as a credit card receipt. The same employee was also responsible for reconciling credit card payments to bank statements.
This form of fraud also happens when an employee receives cash from a debtor, steals the cash and issues a credit note showing that the debtor no longer owes the practice anything.
These types of fraudulent arrangements are unfortunately not uncommon, particularly in small businesses and professional practices. They are most often the result of not separating the cash recording responsibility from the cash management function – the same person should not be responsible for both jobs! Unfortunately, this is not easily solved in a small business or professional practice. This is because fixing the problem may require an unaffordable investment in an additional employee.
The problem can be avoided by regularly reviewing or reconciling your cash collected to the “banked” credit card slips, credit notes or journal entries passed, otherwise you could very well end up being short of a lot of cash. Attempts to recover the cash and then having to decide to proceed with criminal charges against your “trusted” employee can be a very harrowing experience.
